Volkswagen on path to launching no-frills brand in China

Article by Christian Andrei, on March 13, 2015

Volkswagen Group is moving forward to materializing its plans to introduce a no-frills brand in China following delays. Volkswagen chief executive Martin Winterkorn said at the Geneva auto show that the carmaker will provide an update on the project "in the foreseeable future.” Winterkorn disclosed the project three years ago as he bids to gain more customers not only in China but also possibly in other emerging markets.

He said in 2014 that the no-frills car would have a tag of between EUR6,000 and EUR7,000 (between $6,500 and $7,600). Early 2014, the German carmaker announced that it had reached an agreement on the basic concept and design of the car, which will be produced in China.

Launching budget models provides another direction VW to gain more sales and profits, as its earnings have been driven by its premium Audi, Porsche and Bentley brands.

VW is currently the largest foreign carmaker in China, building vehicles cars for its namesake VW brand, Audi and Skoda marques through joint ventures with FAW Car Co. and SAIC Motor Corp.

In November 2013, VW China chief Jochem Heizmann divulged plans to hike production capacity at its Chinese plants beyond its previous annual production target of 4 million units by 2018. VW recently warned that its plans to increase earnings this year might be stymied because of economic troubles in Russia and Brazil.

Topics: vw, china

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